Tech giants set to battle over game consoles and other gadgets

Tech giants set to battle over game consoles and other gadgets

As the clash between handsets running Google and Apple software winds down, the fight to provide the brains for game consoles, watches and other gadgets is heating up.

According to ComScore, 141 million people in the United States own smartphones, some 59 per cent of the population. Most developed economies are at most a few years behind in penetration. As a result, it's becoming harder to sign up new users. And the market has essentially settled into a duopoly.

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Image: People talk on their mobile phones as passers-by walk past a Sprint store in New York.Photographs: Keith Bedford/Reuters

Tech giants set to battle over game consoles and other gadgets

Apple's iOS boasts 39 per cent of US users, while Android accounts for more than half the market, with a range of manufacturers making handsets running Google's operating system. Developing countries still offer room for growth, and consumers will have to replace handsets as they break, fall in puddles, or become obsolete.

But the increasing need to win customers from rivals can be a recipe for price wars. Moreover, new phones now mostly seem evolutionary, rather than radically new. If Apple's next phone is simply an iPhone 5S - signifying an improved version of the existing iPhone 5 rather than a full redesign - the average user might not see much reason to upgrade.

Tech giants set to battle over game consoles and other gadgets

That's why the operating system rivalry is gradually moving to new devices. Introduce Internet-enabled glasses or a new hit watch, and millions of new users could materialise. That in turn would lead developers to create new apps, making an operating system more useful and giving it an edge over its competitors.

This explains why Google is pushing Google Glass and Apple is applying to trademark the term iWatch. The race is even recruiting older types of devices. Google is developing a game console because it thinks Apple may release one, according to The Wall Street Journal. Both companies are intensifying efforts in television as well.

Tech giants set to battle over game consoles and other gadgets

Apple's integrated approach means it gains from hardware sales if users favour its operating system. Google, on the other hand, makes nearly all its money on advertising - but that business also benefits if Android dominates the OS market.

Samsung Electronics, the most prominent producer of Android-powered devices, last week unveiled a profit forecast that fell short of expectations for the first time in years. And Apple's sales of iPhones grew only 7 per cent year-on-year in the most recent quarter, against nearly 90 per cent a year earlier.

Tech giants set to battle over game consoles and other gadgets

Both data points suggest smartphone rivalry is on the wane. But the operating system struggle isn't going away.

Context news

i) Samsung Electronics warned on July 5 that second-quarter profits would be 9.5 trillion won ($8.3 billion) compared to analysts' expectations of 10.2 trillion won. The company's mobile business represents about 70 per cent of the Samsung Electronics profits.

ii) Apple has applied for a trademark for the term 'iWatch' in Japan, Reuters reported on July 1. Chief Executive Tim Cook said last month that wearable electronic products were ripe for exploration.